12 Oct 2023

Corporate Update Bulletin - 12 October 2023

Welcome to the latest edition of Corporate Update, our fortnightly bulletin offering a five-minute read of the latest developments which we consider relevant to corporate counsel. Please get in touch with your usual contact if you want to explore any of the topics covered in more detail. If you would like to subscribe to this bulletin as a regular email, please click here.

In this issue:


FRC publishes its annual review of corporate reporting

On 5 October, the Financial Reporting Council (FRC) published its Annual Review of Corporate Reporting, which sets out findings from its review of UK corporate reporting carried out during the 12 months to 31 March 2023 (based on an assessment of the annual reports and accounts of 263 FTSE250, AIM and large private companies). Key findings include:

  • Quality of Reporting: FTSE 350 companies maintained their general quality of reporting in the reporting, which was seen as a positive outcome  given the challenging economic environment. The FRC also found reporting had improved in areas such those relating to alternative performance measures.
  • Judgments and Estimates: The most frequently raised concerns related to judgements and estimates and the impairment of assets. The FRC is of the opinion that this is most likely a consequence of increased economic uncertainty
  • Climate Reporting: the FRC found that there was a wide breadth of maturity in the stages of companies reporting on climate related matters.  

In discussing key matters for 2023/24, the FRC highlighted the impact of high inflation and interest rates, and the range of uncertainty over a number of economic factors (including inflation and climate change). In this context, the Review sets out the FRC’s key disclosure expectations for 2023/24, focusing on clear and transparent disclosures on uncertainties, risks facing the business, and material risks arising from financial instruments. Companies should clearly explain the impact of risks and changes in the business environment on their performance and prospects and carefully consider the effect of uncertainty on disclosures. The FRC also expects companies to provide a clear statement of consistency with TCFD.

Transition Plan Taskforce releases its final disclosure framework

Following consultation on its draft framework (published November 2022), on 9 October 2023, the UK Transition Plan Taskforce (TPT) published its final framework for disclosure of private sector transition plans (the “Framework”), together with implementation guidance,  technical mapping annexes that illustrate how the Framework relates to other disclosure frameworks and a legal considerations paper for preparers of transition plans using the Framework. In addition, it also published a consultation on a Sector Summary which outlines decarbonisation levers and metrics & targets for 40 sectors, which will close on 24 November 2023.

The Framework is organised around five disclosure “Elements” (Foundations, Implementation Strategy, Engagement Strategy, Metrics and targets, and Governance) broken into 19 further sub-elements, underpinned by the three guiding principles of “ambition, action and accountability”. The Framework recommends that entities take a “strategic and rounded” approach in designing their transition plan – in other words, the entity should consider the actions that it can take now to capture opportunities, minimise future risks and protect and enhance its long-term value. The Framework is intended to be consistent with, and build on, the final Climate-Related Disclosures standard (IFRS S1 and S2) issued by the International Sustainability Standards Board (ISSB). 

The TPT intends to launch a consultation on additional “deep dive” sectoral guidance in November 2023. More generally, the government is due to consult on transition planning disclosure requirements for large public and private companies in Winter 2023; and the FCA will also consult on introducing guidance aligned with the TPT Framework at the same time when it consults on the application of UK-endorsed ISSB standards to listed companies.

Green Technical Advisory Group report on institutional home for UK green taxonomy

On 5 October 2023, the Green Technical Advisory Group (GTAG) released a report on creating an institutional home for the UK Green Taxonomy. The report is the GTAG’s final piece of technical advice to the government on the design and implementation of the UK Green Taxonomy. The report assesses the different options for creating an ‘institutional home’ for the taxonomy, highlighting that how the requirement for taxonomy-aligned disclosures is implemented (whether through amendment of  Companies Act 2006, amendment to the Listing Rules or via a completely voluntary approach) will inform the options for the taxonomy’s institutional home.

Options include responsibility for the taxonomy being housed by a statutory decision-making body, an advisory body to the government or a fully independent body, with GTAG recommending that the institutional home should be an advisory body to the government.

Case Law

Amathus Drinks Plc v EAGK LLP [2023] EWHC 2312 (Ch)

High Court considers whether auditors owed duty of care to third party 

In this case, the issue was whether the defendant auditor owed the claimant buyers a common law duty of care in preparing a company’s statutory and completion accounts, despite the auditor’s terms of engagement which disclaimed assumption of responsibility to anyone other than the company and its members. 

The buyers had acquired the target company on the agreement that the purchase price would be adjusted in light of completion accounts. The defendant auditor had been engaged to prepare the completion accounts and it issued a completion certificate addressed to the seller. The buyers later discovered an alleged accounting fraud which resulted in the company’s net assets being inflated, meaning they overpaid for the shares of the company. 

The buyers argued that the defendant auditor firm owed them a common law duty of care to exercise reasonable skill and care in the preparation of the company’s accounts and the completion certificate, on the basis that it had assumed responsibility to them. The defendant auditor relied on the case of Barclays Bank plc v Grant Thornton UK LLP [2015] EWHC 320 (Comm), arguing that its terms of engagement disclaimed assumption of responsibility to anyone other than the company and its members, and the disclaimer was an insuperable barrier to the claim. However, the High Court distinguished Barclays on several grounds, including the existence of continuing communications between the parties after the date of the audit engagement, suggesting a kind pf continuing relationship which was absent in Barclays. The Court therefore refused to strike out the claim against the auditor and held that the buyer had a realistic prospect of showing that the defendant auditor owed them a common law duty to exercise reasonable skill and care in preparing the target’s statutory and completion accounts, despite the auditor’s terms of engagement. 


This material is provided for general information only. It does not constitute legal or other professional advice.

Contact Information
Filippo De Falco
Partner at Slaughter and May
Alfred King
PSL Counsel at Slaughter and May